Structures

• Factors for deciding the right structure:

  • size - a more formal structure is needed for a larger business.
  • technology - introduction of new technology can change the structure - it will be easier to communicate over large distances.
• Factors for deciding the right structure:

  • product - having a small number of large customers means a flat or matrix structure is more likely.
  • market - if the market is small and local, then the organisation may have an entrepreneurial structure.
• Factors for deciding the right structure:

  • staff knowledge + skills - if staff are highly skilled, a less formal structure may be needed, less control required.
  • finance available - additional managers may cost money.
• Structures

  hierarchical (tall)

  • many layers of management
  • long chain of command
  • managers likely to have a narrow span of control
  • useful where tight supervision and control is needed
• Structures

  hierarchical (tall)

  advantages

  • a lot of control and supervision as decisions made by senior management.
  • clearly defined roles and procedures for carrying out roles.
  • managers have a narrow span of control making it easier to oversee the work of staff.
  • staff become specialist in their role.
  • more promotion opportunities.
• Structures

  hierarchical (tall)

  disadvantages

  • decision making takes a long time.
  • communication can be slow.
  • staff can find it difficult to respond to customer requests speedily.
  • inability to change quickly makes the business vulnerable to changes in the market.
• Structures

  flat

  • fewer levels of management
  • shorter chain of command
  • managers likely to have a wider span of control
• Structures

  flat

  advantages

  • a lot quicker for information to flow up and down the organisation
  • gathering information and consultation takes less time, so decisions can be made more quickly.
  • more able to respond quickly to changes in the market.
  • customers' needs are quickly identified and dealt with.
• Structures

  flat

  Disadvantages

  • removal of management levels means there is less control throughout the organisation.
  • mistakes are easier to make and harder to identify.
  • fewer opportunities for promotion.
• Structures

  matrix

  • used where te business is involved in a number of large products.
  • teams are formed with staff from all functional departments, using their expertise as required.
  • when the project is over the team will be disbanded.
  • staff may work on more than one team at a time.
• Structures

  matrix

  Advantages

  • teams of different specialists provide a range of skills, increasing innovation.
  • complex problems can be solved effectively.
  • employees can learn new skills and gain experience from working in a diverse team.
  • employees can be motivated and empowered.
  • improves relationships between staff from different functional areas.
• Structures

  matrix

  Disadvantages

  • employees have 2 managers to report too. their functional and matrix.
  • can be confusion and conflicting between the department and the project.
  • can be costly to set up and manage - support staff/admin to hack up the team.
• Structures

  entrepreneurial

  • usually in small sized businesses.
  • one or 2 main decision makers.
  • a lot of reliance on main decision maker.
• Structures

  entrepreneurial

  Advantages

  • decisions can be made quickly.
  • decisions are made for the benefit of the whole business.
  • decision makers are very experienced.
  • staff know who is in charge/accountable to.
• Structures

  entrepreneurial

  Disadvantages

  • if decision maker is unavailable, then decisions can't be made.
  • places a heavy workload on the key decision maker.
  • it does not allow initiative from staff.
  • staff can be demotivated as they aren't involved in decision making.
• Structures

  centralised

  • key individuals, top level of management make most of the decisions for the whole organisation.
  • often fits with hierarchical structures which are highly centralised in terms of decisions making.
• Structures

  Centralised

  advantages

  • Standard method of operations means it is easier to promote a corporate image.
  • Economies of scale achieved through purchasing centrally.
  • Decisions made for benefit of whole organisation.
  • Strong leadership and Decisions made by experienced Senior Managers.
  • Control held by key staff.
• Structures

  Centralised

  disadvantages

  • Staff have very little authority - no room for inactive - may feel demotivated.
  • Decisions may not reflect local conditions.
  • Does not develop staff (e.g. allow branch managers to make decisions).
  • Burden of decision making lies with just a few senior directors.
• Structures

  Decentralised

  • Decision making made by middle and lower level managers, allowing for more decisions to be taken by the local branches.
  • Head Office plays a supporting role.
• Structures

  Decentralised

  advantages

  • Decision making is quicker - no need to refer matters up the chain.
  • Organisation more responsive to changes in the market and to local conditions.
  • Decision makers are closer to customers and have better knowledge of their needs.
  • Delegation/empowerment of staff helps develop their skills/abilities and prepared for promotion.
  • More motivated staff as they are trusted to do their work.
• Structures

  Decentralised

  disadvantages

  • Some overall control of the business is lost.
  • Inexperienced managers making decisions which can harm the whole organisation.
  • Greater supervision may be required.
  • Middle/low managers may need training.